Kaiser to increase its rates 2 percent

Kaiser Permanente Hawaii is increasing the rates it charges businesses and government employers by an average of 2 percent beginning Jan. 1.

The increase is the smallest since Kaiser raised rates 2 percent in both 1998 and 1999. Last year, Kaiser boosted its rates 3.75 percent.

Kaiser, the state's largest health maintenance organization with 220,000 members, did not need approval from the state Insurance Division for the increase because a new health insurance rate regulation law does not go into effect until Jan. 1.

Hawaii Medical Service Association, the state's largest health insurer, also plans to adjust rates for some groups in January, but declined yesterday to disclose the size of the adjustment because the new law is not yet in effect.

Kaiser Permanente Hawaii, the state's largest health maintenance organization, is boosting the rates it charges commercial customers an average of 2 percent beginning Jan. 1.

The increase, which applies to businesses as well as federal and state employers, is the smallest since Kaiser raised premiums 2 percent in both 1998 and 1999.

Kaiser, which has 220,000 members, did not need approval from the state Insurance Division for the increase, because the health insurance rate-regulation law signed by Gov. Linda Lingle in June does not take effect until Jan. 1. Kaiser typically decides on its rates late in the year, so they can go into effect at the start of the new year.

"Even though medical costs are continuing to rise much faster than general inflation, we are trying to keep our rate adjustments as low as possible," Jan Kagehiro, director of member and marketing communications for Kaiser, said yesterday. "We recognize that health insurance is a major cost for businesses, and we've really tried to work hard to stabilize our rates."

Hawaii Medical Service Association, the state's largest health insurer with nearly 700,000 members, adjusts rates for most of its large-employer groups -- those with 100 or more employees -- in January.

However, HMSA Senior Vice President Cliff Cisco declined yesterday to disclose the size of the adjustment because the new law is not yet in effect and HMSA was not required to reveal the information. Rates for HMSA's small-employer groups do not go into effect until July 1.

Last year, Kaiser raised its rates an average of 3.75 percent, the first increase since state oversight expired on June 30, 2006.

Beginning Jan. 1, however, Hawaii's health insurers will once again need to file their rate applications with the Insurance Division. That was the case from Jan. 1, 2003, until the end of June 2006, when the 3-year-old state regulation expired and was not extended by lawmakers. For the past year and a half, health insurers were able to determine their own rates without oversight.

State Insurance Commissioner J.P. Schmidt said he was happy to see rate regulation return to the state's health insurance industry.

"I think it's a significant protection for consumers in the state of Hawaii," Schmidt said. "No other state requires employers to provide insurance for their employees, and where the state (Hawaii) is requiring purchase of insurance, there is some responsibility to monitor the product.

"In addition, for the health insurers, it ensures that there is a more level playing field to provide fair competition."

Other insurers in the state are Hawaii Medical Assurance Association, University Health Alliance and Summerlin.

Schmidt said it would be difficult for him to express an opinion on Kaiser's rate increase because he does not know the factors that led to the increase.

"Kaiser went through fairly significant changes in their personnel, corporate structure and other factors that may well play into this particular rate increase," Schmidt said. "So it's really difficult for me to say without that information."

Kaiser, which reported yesterday a $600,000 loss for the third quarter, has cut 144 positions and overhauled its management during the past year.